Analysis: Can Sam's Club bring health care tech to the local doctor?

In two years, the federal government will begin divvying up $19 billion in reimbursement money to help health care organizations and doctors cover roll out electronic medical records (EMR) technology. In the meantime, the cost for the technology, which can run tens of millions of dollars for large facilities and tens of thousands of dollars for private physician practices, rests squarely on the private sector.

Enter Sam's Club. Like the bundled packs of condiments that include ketchup, mustard and relish, the wholesale outlet now allows physicians to add bundled EMR systems to their electronic cart. Last month, the Wal-Mart subsidiary began offering a bundled EMR service that includes software, hardware and technical support in three states -- Illinois, Georgia and Virginia -- as a test bed for offering the software as a service (SaaS) product throughout the U.S.

So far, interest is "extremely strong," said Susan Koehler, a spokeswoman for Sam's Club, although the company could not offer any sales figures.

While it may seem odd for a wholesale retailer to dip its toes into the health care technology market, physician practices that lack any technical support could use a SaaS model to cover the technical aspects of EMRs.

Helping spur the adoption of SaaS models in health care is the U.S. government, which has been ambiguous about which EMR systems will qualify for up to $44,000 in reimbursement funds beginning in 2011, according to Judy Hanover, an analyst on health care information technology at IDC in Framingham. Hanover said that fewer than 10% of private practices have deployed any kind of comprehensive EMR system thus far.

President Barack Obama has said the government's plan under the Health Information Technology for Economic and Clinical Health Act, or HITECH, is to have a nation-wide EMR network in place within five years. EMRs will not only enable the sharing of patient medical information between facilities, pharmacies and laboratories -- ensuring the most up-to-date patient information is available -- but it should help speed care and ensure the use of best practices.

Targeted at private practices with five doctors or less, the Sam's Club service bundles software and support from eClinicalWorks Inc., in Westborough, Mass., with Dell computers.

The software, eClinicalWorks EMR v8.0, is certified by the Certification Commission for Healthcare Information Technology, which is likely to become a prerequisite for receiving the incentive money, Hanover said.

According to the New England Journal of Medicine, physicians who demonstrate "meaningful use" of EMR systems in 2011 can start collecting reimbursements for their costs over five years. If they wait until 2013, the most they could get is $27,000 paid out over three years, a reduction designed to spur doctor's offices to move quickly.

According to David Blumenthal, the National Coordinator for Health Information Technology who wrote the Journal of Medicine piece, the cost of purchasing, installing and implementing an electronic-records system in a medical office will be about $40,000.

But what constitutes "meaningful use" won't likely be hammered out until U.S. Secretary of Health and Human Services, Kathleen Sebelius, begins committee meetings on the topic next week. So the ambiguity surrounding which EMR systems will pass muster -- and the need to replace existing proprietary equipment in their offices -- has physicians waiting for more details.

Because Wal-Mart already has pharmacies and clinics in many of its stores, and because it sells computer technology at its Sam's Club stores, the company felt health IT was a natural fit, according to Koehler. "This is not unlike how we act every day. We offer products by editing out that assortment so that we're providing the best of best. We act as the purchasing agent -- from milk to things like this," she said.

The software from eClinicalWorks offers front-office management tools including patient registration and appointment scheduling; middle-office management, such as electronic medical records; and back-office management, as in electronic billing. The service costs $250 per month per provider or $350 per month if its hosted by eClinicalWorks.

eClinicalWorks CEO Girish Navani said his company's service includes five days of on-site training, maintenance for the first year and any upgrades. The company also offers online Webinars for continuing training. The service can be hosted by eClinicalWorks or installed completely on site and Navani said he expects the service to be nation-wide by the end of the year.

According to Navani, offering the technology as a SaaS model for small physicians' offices created a brisk business. First quarter sales this year were up 20% over the previous year. "We expect to see top- and bottom-line growth this year of 24% to 40%," he said. "Our revenue went from $1 million in 2003 to $84 million this year."

"Wal-mart and we have been partnered for about one and a half years," he said. "They're serious about health care, with their $4 prescriptions and in-store clinics. They want health care to get cheaper and better. We want the same thing."

One sticking point in rolling out a bundled SaaS product in a physician's office is that there is already technology that it would negate, such as billing and record keeping systems. And migrating data over could be an arduous task, according to Hanover.

But, said Navani, the move by Sam's Club is a clear indicator that change is coming to health care IT. "This will definitely change the EMR market," he said. "People have had to react to the lower pricing because even though we've been offing this for a long time, it just got validated by [Sam's Club] in a big way."

PCW Evaluation Team

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

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